LONDON, 12 August 2005 — World oil prices rocketed to historic peaks as high as $66 yesterday, owing to huge speculative buying, sky-high global demand and continued refinery outages in the United States, analysts said.
New York’s main contract, light sweet crude for delivery in September, hit a record $66 per barrel, and has now risen almost $3.70 in less than a week. It later stood at $65.55, up 65 cents on Wednesday’s close. The price of Brent North Sea crude oil for delivery in September, meanwhile, soared to a new record high of $65.66 per barrel, before trading at $65 — a rise of 1.01.
“The market is just continuing to try and pass new highs all the time, Global Insight analyst Simon Wardell said. “It’s looking for a level of prices that would hamper demand, but we haven’t reached it yet, so prices are going to continue to rise.”
He added: “The petrol and gasoline situation in the US is probably the most worrying factor at the moment, and it looks like it could be an ongoing problem because a shortage of refining capacity is not something that can be solved very quickly.”
Crude futures are about 42 percent higher than a year ago in New York, while Brent crude is up some 50 percent over the same period. However, adjusted for inflation, they remain below levels reached in the wake of the 1979 Iranian revolution when prices surged to upward of $80 a barrel in today’s money. “The market remains a bullish market in the medium term, and there’s no reason why we shouldn’t see prices go through $70 quite comfortably,” a trader with a European brokerage firm said.
The Department of Energy (DoE) said in Wednesday’s weekly report that gasoline, or petrol, inventories fell by 2.1 million barrels in the week to August 5. Crude reserves jumped by 2.8 million barrels while stockpiles of distillate products, which include heating oil, rose by 2.6 million barrels.
On the refinery front, British energy giant BP said Wednesday it had closed a gas-oil hydro-treating unit at its huge petrochemical complex in Texas City, in the southern United States, because of a leak. It was the latest in a series of mishaps to hit the Texas City facility — BP’s biggest — which processes 460,000 barrels of oil daily when fully operational. An explosion there in March killed 15 people. French energy group Total meanwhile said that its onshore Obagi oil field in Nigeria remained shut owing to unrest among local communities. In addition, the market has been convulsed by developments in the oil-rich Middle East.